In this article
Key points
- Pension or lump sum: the big question future retirees face about their BVG/LPP assets.
- The BVG/LPP pension protects against longevity risk, but it is taxed at 100% and offers few benefits in the event of death.
- From 1 January 2025, the taxation of life annuities falls significantly.
- A life annuity with a refund option combines regular income, lighter taxation and protection for heirs.
The main question future retirees ask themselves is how to manage their BVG/LPP assets: should they take them as a pension or as a lump sum?
Lower taxation of life annuities opens up new prospects.
The BVG/LPP pension: advantages and disadvantages
A pension makes it possible to control the following aspects (advantages), but it also has some major disadvantages:
The BVG/LPP pension
Table 1| Advantages | Disadvantages |
|---|---|
| Longevity risk | Taxation: pension taxed at 100% (as income) |
| Simple management of one’s assets | Benefits in the event of death: 60% for the spouse |
| Regular income | No benefits for single or widowed persons |
What changes on 1 January 2025
The Federal Parliament recently decided to significantly reduce the taxation of life annuities from 1 January 2025: the taxation of life annuities will be reduced from 40% to 1%.
The life annuity with a refund option
By taking out a life annuity with a refund option, any unused capital is returned to the heirs in the event of premature death.
This way, you can enjoy your retirement without worrying about your income or managing your assets, while protecting your loved ones.
Assidu
Conclusion
Our team of pension and financial planning specialists regularly analyses the solutions offered by the various market players and proposes solutions that meet our criteria in terms of guarantees, flexibility and profitability.
Do you have questions about planning your retirement? The Assidu SA team is at your complete disposal!
